Technology, Aging and Obesity Drive Healthcare Spending, BEA Finds

The U.S. Department of Commerce Bureau of Economic Analysis (BEA) released, for the first time, data that quantifies Americans’ spending to treat 261 medical conditions, from “A” diseases like acute myocardial infarction, acute renal failure, ADHD, allergic reactions, anxiety disorders, appendicitis and asthma, to dozens of other conditions from the rest of the alphabet.

High Spending Growth Rates For Key Diseases In 2000-14 Were Driven By Technology And Demographic Factors, a June 2018 Health Affairs article, analyzed this data.

This granular information comes from the BEA’s satellite account, using data from the Medical Expenditure Panel Survey which nationally examines expenditures by disease; and, a “blended account,” which mines claims databases of information for millions of insured Americans and billions of their claims.

The Bureau is working to better understanding health care spending at this detailed level, by condition.

The first illustration shows how medical conditions were divided into the 261 so-called “detail conditions.” The typology starts with aggregate conditions, including Circulatory, Musculoskeletal, Respiratory, Endocrinological, Nervous system, Neoplasms, Injury/poisoning, Genitourinary, Digestive, Mental illness, Infectious disease, Skin, Pregnancy/birth complications, Blood organs, Perinatal, Congenital anomalies, and Symptoms, check-ups, and ill-defined conditions.

Six conditions made up 51.4% of total medical spending: Circulatory (12% of total healthcare spending), Musculoskeletal (9.9%), Respiratory (7.9%), Endocrinological (7.7%), Nervous system (7.2%), and Neoplasms (6.7%). In addition, symptoms, checkups, and ill-defined conditions accounted for 13% of spending.

The second chart indicates healthcare spending by category in billions of dollars and annual rate of growth. Some key findings from this study were that:

The fastest-growing spending conditions between 2013 and 2014 were infectious disease, mental illness, and diabetes.

The key drivers of spending growth were the adoption of new technologies, shifting to more preventive services, obesity and population aging.

The highest per capita (per person) spending on the top 30 conditions were for medical exams (checkups), diabetes without complications, rehabilitation care, immunizations/screening, chronic kidney disease, septicemia, osteoarthritis, and maintenance chemotherapy.

Among the top thirty conditions were diseases for which new specialty drugs are available to cure or chronically manage – among them, rheumatoid arthritis, hepatitis, HIV infection, and multiple sclerosis. For these diseases, the high drug cost is largely behind the cost growth. Even with that high cost, the authors note, many are seen to be cost-effective and “worth” their cost in terms of value and patient outcomes. There’s good news here in that some conditions once thought to result in mortality are now evolving to chronic conditions, like HIV and many cancers, for which treatments are lower in toxicity and helpful for extending life with quality.

Aging contributes to healthcare spending for age-related diseases like osteoarthritis; retinal detachments, defects, and vascular occlusion; and delirium, dementia, and other cognitive disorders. The researchers note that aging combines with higher obesity rates among older people that further drive healthcare costs for conditions such as diabetes, with higher risk for kidney disease and renal failure. The study found “rapid growth” (the authors’ words) for the treated prevalence for these three conditions.

Health Populi’s Hot Points:  The third chart shows consumers’ top-line for healthcare spending: that healthcare makes up 20.6% of U.S. consumer spending versus spending on other commodities. That’s just over $1 in every $5 for each U.S. health citizen.

The BEA researchers recognize that technology has improved health outcomes for a great many of the 261 conditions that make up the study. Still, the American healthcare system continues to be wasteful in terms of duplication, paper-intensive process, and inefficient workflow, which deflates the value and return on healthcare spending. In addition, healthcare prices in the U.S. hover much higher than in other developed countries, especially relative to the value of incremental innovations, the BEA team found.

One of the key goals of the satellite account study is to identify areas to improve efficiency in U.S. healthcare spending.

With health consumers allocating 20% of household spending on healthcare, making healthcare more efficient will also benefit peoples’ household budgets.

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